JPMorgan knocked off the list; Intel now a top-five payer

#3: Merck

Merck (NYSE:MRK) is similar to Pfizer (NYSE:PFE) in many ways — namely that it faces patent expirations, it hopes its pipeline can step up to fill the void, and it pays a huge dividend.

Except Merck has soared in 2012 because, unlike Pfizer, it hasn’t taken as hard a hit on its pipeline and has seen big successes in up-and-coming treatments to replace the ones it will lose to generic competition. A new osteoporosis drug looks very promising for the drugmaker, and investors have piled in since July, driving up shares about 14% in just a month’s time and up 40% in the last calendar year!

Plus, the continued roll-in of the $41 billion Schering-Plough buyout from a few years ago will provide new opportunities for Merck, or at least ensure the company won’t fade away.

Like cohort Pfizer, MRK is sitting on a huge war chest. Some $13.5 billion in cash and $1.4 billion in short-term investments keeps this pick pretty safe when it comes to writing the checks.